The American tech giant intends to appeal the decision.
The UK Competition and Market Authority has taken action to prevent Microsoft's purchase of Activision Blizzard. This move deals a significant setback to the technology company, as it tries to persuade regulators that the acquisition will not harm competition.
Today, the UK's regulator has issued its final ruling on Microsoft's attempt to acquire Activision Blizzard, declaring that "Microsoft’s proposed solution failed to effectively address the concerns in the cloud gaming sector."
The CMA had previously voiced concerns that Microsoft's Xbox Game Pass subscription service, which offers cloud gaming as one of its benefits, could undermine competition in the emerging cloud gaming industry. The regulator argued that this could ultimately limit innovation and choice for UK gamers, prompting its decision to block the acquisition.
"The CMA carefully considered whether the benefit of having Activision’s content available on Game Pass outweighed the harm that the merger would cause to competition in cloud gaming in the UK," the regulator wrote in a press release.
"The CMA found that this new payment option, while beneficial to some customers, would not outweigh the overall harm to competition (and, ultimately, UK gamers) arising from this merger, particularly given the incentive for Microsoft to increase the cost of a Game Pass subscription post-merger to reflect the addition of Activision’s valuable games."
Following the decision, Microsoft President Brad Smith released a statement, stating that the company is "fully committed to this acquisition and will appeal." According to him, the CMA's ruling "disregards a practical approach to resolving competition concerns and discourages technological innovation and investment in the United Kingdom."
"We have already signed contracts to make Activision Blizzard’s popular games available on 150 million more devices, and we remain committed to reinforcing these agreements through regulatory remedies," Smith said. "We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works."
Despite not receiving the CMA's approval, Microsoft will still have to persuade other regulators not to impede the acquisition. The EU is still investigating the merger to determine if it has negative impacts on competition, while the US Federal Trade Commission has filed a lawsuit to prevent the deal based on antitrust concerns.
You can find the CMA's press release here. Also, don't forget to join our 80 Level Talent platform and our Telegram channel, follow us on Instagram and Twitter, where we share breakdowns, the latest news, awesome artworks, and more.